The complicated process of filing taxes is often not clearly understood until a person goes through their first tax season. For a person using only a W-2, the experience may have been limited to “painstaking”. For someone who freelances or owns their own business, the process could have easily become mentally painful. If you’re looking for a way to improve the way you do tax season, here are some steps you should be taking.
1. Start Organizing Early
The most important thing you can do for yourself this year is start organizing your tax documents. If you are a straightforward employee, this becomes very easy as you only need it set aside your W-2. It is recommended that you file and keep W-2s from previous years as well.
If you are a freelancer or a small business owner, it is much more important to meticulously file any documentation relating to your taxes. Purchase a file box, place it in an accessible location, and keep each necessary document filed properly.
2. Discuss your Filing Status
If you are filing jointly with a spouse, it is important that you are on the same page in regards to your status and deductions. Knowing exactly what categories you fall under can be tricky and disastrous if miscommunicated. It may also be beneficial to speak with a professional about what status and deductions are right for you.
3. Consider a Tax Software
Most people have at least heard of various accounting software programs available for both individuals and businesses. These programs can be a huge help for people with simpler tax filings and are certainly worth your while. However, sometimes these programs do not cover all the needs of a freelancer or small business owner. NASE members receive a discount as part of you membership on Turbo Tax, and we recommend you try that one. Another one you might try (though we do not currently offer a discount) is Advanced Micro Solutions, they have an online program that serves as both W-2 software and 1099 software.
4. Hire a Specialist
There are many situations in which a person could benefit from the help of a tax specialist. For freelancers and small business owners, a tax specialist is often a necessity. If you aren’t sure what deductions you qualify for, a tax specialist can also be extremely helpful. Many people do not realize that they could be receiving tax breaks or that they have been filing incorrectly.
For freelancers and small business owners, properly filing your taxes without help can be a nightmare. There are so many confusing components that can be very detrimental if done incorrectly. It is much better for you to hire a specialist and ensure that you are filing properly. Even though a specialist will cost you a little extra, they will make it worth your while in deductions and fraud avoidance.
Filing your taxes can be very complicated, particularly if you are not prepared. The best way to ensure a hassle-free tax season is to organize your documents, communicate with any necessary people, try out a tax program, and maybe even hire a specialist. Figure out a tax preparation schedule that works best for you, and you may be amazed by how effortless tax season can become.